HELSINKI: Plunging oil prices are moving oil companies to cut spending on exploration activity, presenting a major challenge for seismic companies globally as the most volatile and cyclical segment of the oilfield services industry, says Moody’s Investors Service in a new report published yesterday.
“We do not expect a significant recovery for seismic companies in the near term, especially as oil prices remain volatile,” says Eric Kang, a Moody’s Analyst. “Spending on seismic is typically the first item that oil companies cut and the last they reinstate when they resume investing.”
The 55% plunge in benchmark crude prices from June 2014 to March 2015 has made oil companies more cautious of offshore exploration activity, seeking to align their spending with diminished cash flow expectations. Moody’s anticipates at least a 15% drop in offshore upstream investments in 2015, which would continue the downward trend that started in mid-2013.